Time limits for tax assessments, claims and refunds

What are the time limits for claiming a tax refund? How far can HMRC go back and raise an assessment? How many years back can a taxpayer appeal? What are the time limits for correcting a tax return?

This is a freeview 'At a glance' guide to time limits for tax assessments, claims and refunds.

At a glance

What are the time limits for tax claims and assessments?

There are many different time limits. The limit set depends on whether it is a claim or an assessment.

The basic rules are:

• The normal time limit for enquiring into a tax return filed on time is one year from the date the return was filed.
• If a return has been amended, the time limit for enquiry into the part amended is one year from the date of amendment.
• If no return is filed, the filing deadline is missed or the taxpayer is dead, different timetables apply.
• Extended assessment time limits apply if the taxpayer did not take reasonable care or if conditions for a Discovery Assessment are met.

Claims for Income Tax and Capital Gains Tax (CGT)

When a claim is required to be made within a tax return, you must make the claim by 31 January following the end of the year of assessment. You are then allowed a further 12 months from the filing deadline to amend the return.

Time limits for specific claims vary though, for example (it is advised to double-check each relief):

• CGT Holdover/Gift relief is four years.
• Private Residence elections: two years.
• Enterprise Investment Scheme (EIS): Income Tax relief/CGT deferral five years, gains two years.
• Capital Allowances: two years.

Refunds and Discovery Assessments

• All these limits apply from the end of the chargeable period.
• The general rule is that a refund or repayment cannot be claimed more than four years after the end of the relevant tax year.
• For example: if you are claiming a refund for the 2019-20 tax year, you add four years to 2020. You must make your claim by 5 April 2024.

 When can HMRC use the extended time limits?

For b) and c) detailed conditions have to be met.

• There has to be a loss of tax.
• HMRC raised an assessment.
• The loss of tax brought about carelessly or deliberately etc.
• See Discovery Assessments

The 20 year time limit can also apply for:

• Failure to Notify Chargeability.

Extended time limits: offshore offences

• The discovery time limits for the assessment of offshore income, capital gains and Inheritance Tax were extended from four or six years to twelve years from 6 April 2019.
• See Time Limits: Offshore assessments

Repayment claims: PAYE

The following tables show the deadlines for taxpayers under  PAYE.

Self Assessment taxpayers  

PAYE refunds 

From 31 May 2024, HMRC will no longer automatically issue repayments by cheque to employees that receive a tax calculation letter. Instead, employees will need to claim their repayments at Tax overpayments and underpayments. 

Instructions on how to claim will be included on the tax calculation letter, this will include alternative options for customers who cannot claim their repayment online. 

PAYE refunds out of time: Extra-statutory Concession B41

HMRC has the discretion to make repayments out of time under ESC B41:

‘...repayments of tax will be made in respect of claims made outside the statutory time limit where an overpayment of tax has arisen because of an error by the Inland Revenue [now HMRC] or another Government Department, and where there is no dispute or doubt as to the facts.’ 

Corporation Tax

Time limits are set according to accounting periods, see HMRC Corporation Tax time limits.

Error or mistake relief

Overpayment Relief and repayment claims are limited to four years. A special relief exists (see below) which can provide relief in cases where the taxpayer is out of time for appeal.

The above time limits do not affect:

• Periods already out of date under the old time limits.
• The time limits for enquiring into Self Assessment (SA) or Corporation Tax Self Assessment (CTSA) returns.
• The time limits for making penalty determinations for direct tax.
• The time limits for assessing Class 1, 1A and 2 National Insurance Contributions.
• The two-year rule and the evidence of facts rules for VAT assessments.

The normal time limit for most assessments and determinations is four years from the end of the relevant tax period, there are however many variations from this norm according to HMRC. 

Special relief: out-of-time appeals against determinations and penalties

A special statutory relief exists in cases where it would be unconscionable for HMRC to seek to recover an amount of tax or refuse repayment (if already paid). This relief only applies where HMRC has made a determination of tax due and provided certain defined circumstances are met, see Special Relief.

Completion of unconditional contracts (CGT and Corporation Tax)

From 1 April 2023:

• Finance (No.2) Act 2023 closes an avoidance loophole where an asset is disposed of under an unconditional contract and more than four years pass before the asset being conveyed or transferred.
• The changes apply:
  • With contracts entered into on or after 1 April 2023 for Corporation Tax and 6 April 2023 for CGT.
  • Where the conveyance or transfer of the asset takes place after:
    • The date six months after the end of the tax year in which the disposal is treated as taking place for CGT purposes. 
    • The date is one year after the end of the accounting period of the disposal for Corporation Tax purposes.
• Where the rules apply, the assessment time limit operates by reference to the tax year or accounting period when an asset is conveyed or transferred, rather than the tax year or period in which the contract for the disposal was made.
• See Policy paper: Capital gains: Contracts completed after ordinary notification period

Useful guides on this topic

Discovery Assessments
When can HMRC issue an assessment outside of the normal statutory time limits? What conditions must be met? What are your rights of appeal and defences?

Overpayment relief
What is Overpayment relief? When can you claim Overpayment relief? What are the conditions for a claim for Overpayment relief? What are the time limits for a claim for Overpayment relief?

Special relief
What is Special Relief? When does it apply?